Jack Grimestad asks your advice in setting up the accounting records for his new business. He plans to organize as a corporation. The business will be a photography studio and will operate in a rented building. Grimestad will need office equipment, cameras, tripods, lights, backdrops, and so on. The business will borrow money to buy the needed equipment. Grimestad will purchase on account photographic supplies, such as film, paper, and developing solution, and office supplies. Each asset needs its own expense account, some of which have not yet been discussed. For example, equipment wears out (depreciates) and thus needs a depreciation account. As supplies are used up, the business must record a supplies expense.

Grimestad owns the land on which the studio building stands. He will contribute the land to the business, which will then pay the property tax on the land. A gas station located on a corner of the property will start paying its monthly rent to the photography studio. The studio will need an office manager to arrange appointments, keep the books, design advertisements, and pay the rent and the insurance in advance and the utility bills as they come due. Grimestad anticipates paying this person a weekly salary of \(\$ 300\).

He will want to know which aspects of the business are the most, and the least, profitable, so he will account for each category of service revenue separately: portraits, school pictures, and weddings. He will let his better customers open accounts with the business and expects to collect cash over a three-month period. The studio will carry an inventory of picture frames for sale to customers-a separate category of revenue.

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List all the accounts the studio will need, starting with assets and ending with expenses. Indicate which accounts will be reported on the balance sheet and which will be on the income statement.